An offset account is a great tool to pay your home loan off faster, but only if you use it!

An offset account is a savings account that is linked to your home loan.

How it works is that whatever amount you have saved in your offset account is subtracted from the amount you owe on your home loan and the interest is calculated on the difference.

The more you have saved, the less interest you pay and the bigger dent you make on the principal – the actual amount you have to repay. As you continue making your regular repayments, you’re reducing the principal which means your home loan is reducing faster.

As you increase the amount in your offset savings account your interest charges will continue to decrease.

The key is to use your offset account. Save as much as you can into that account, have your wages paid into that account, every cent in that account will have an impact on the speed with which you can repay your home loan.

The important thing to note is that you can withdraw from the account. It’s not like it’s gone forever into the abyss of your mortgage. It’s an effective tool to reduce your debt faster when used well.

As always, the key to paying off debt is to simply save more and spend less.

If you want to find out about having an offset account on your home loan, please get in touch. I’d love to help you own your home faster!